October 1, 2015, Introduced by Rep. Kosowski and referred to the Committee on Insurance.
A bill to amend 1984 PA 64, entitled
"The coordination of benefits act,"
by amending the title and sections 2, 3, and 4 (MCL 550.252,
550.253, and 550.254), section 3 as amended by 1996 PA 325; and to
repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An
act to provide for the coordination of certain a uniform
order of benefits determination under which plans pay claims; to
prescribe
the powers and duties of certain state departments and
agencies;
governmental officers and
entities; and to provide for
require the promulgation of rules.
Sec. 2. (1) As used in this act:
(a)
"Certificate" means any of the following:
(i) A certificate issued by a health care corporation
in
connection
with a group disability benefit plan under which health
or
dental care benefits are provided to a group of subscribers.
(ii) A contract issued by a medical care corporation in
connection
with a group disability benefit plan under which health
or
dental care benefits are provided to a group of subscribers.
(iii) A contract issued by a hospital service
corporation in
connection
with a group disability benefit plan under which health
or
dental care benefits are provided to a group of subscribers.
(iv) A health maintenance contract issued by a health
maintenance
organization in connection with a group disability
benefit
plan under which health maintenance services are provided,
either
directly or through contracts with affiliated providers, to
a
group of subscribers.
(v) A contract issued by a dental care corporation in
connection
with a group disability benefit plan under which dental
care
benefits are provided to a group of subscribers.
(a) "Allowable expense" means a health care expense, including
coinsurance or copayments and without reduction for any applicable
deductible, that is covered in full or in part by any of the plans
covering the individual. The amount of a reduction may be excluded
from allowable expense if a covered person's benefits are reduced
under a primary plan for either of the following reasons:
(i) Because the covered person does not comply with the plan
provisions concerning second surgical opinions or precertification
of admissions or services.
(ii) Because the covered person has a lower benefit because
the covered person did not use a preferred provider.
(b) "Claim" means a request that benefits of a plan be
provided or paid. The benefits claimed may be in the form of any of
the following:
(i) Services including supplies.
(ii) Payment for all or a portion of the expenses incurred.
(iii) A combination of subparagraphs (i) and (ii).
(iv) An indemnification.
(c) "Closed panel plan" means a plan that provides health
benefits to covered persons primarily in the form of services
through a panel of providers that have contracted with or are
employed by the insurer that issues the plan and that excludes
benefits for services provided by other providers, except in cases
of emergency or referral by a panel member.
(d) "Coordination of benefits" or "COB" means a provision that
establishes an order in which insurers pay claims, and that permits
benefits paid under secondary plans to be reduced so that the
combined benefits paid under all plans do not exceed the total
allowable expenses.
(e) "Custodial parent" means any of the following:
(i) The parent awarded custody of a child by a court order or
judgment.
(ii) In the absence of a court order or judgment, the parent
with whom the child resides more than one half of the calendar year
without regard to any temporary visitation.
(f) (b)
"Dental care corporation"
means a dental care
corporation
incorporated under Act No. 125 of the Public Acts of
1963,
being sections 1963 PA 125,
MCL 550.351 to 550.373. of
the
Michigan
Compiled Laws.
(c)
"Group disability benefit plan" means a program making
health
or dental care benefits available to covered persons because
of
the covered person's membership in or connection with a
particular
organization or group, which benefits are provided
through
1 or more policies or certificates.
(d)
"Health care corporation" means a health care corporation
incorporated
under the nonprofit health care corporation reform
act,
Act No. 350 of the Public Acts of 1980, being sections
550.1101
to 550.1704 of the Michigan Compiled Laws.
(g) (e)
"Health maintenance
organization" means a health
maintenance
organization licensed under article 17 of the public
health
code, Act No. 368 of the Public Acts of 1978, being sections
333.20101
to 333.22181 of the Michigan Compiled Laws.that term as
defined in section 3501 of the insurance code of 1956, 1956 PA 218,
MCL 500.3501.
(f)
"Hospital service corporation" means a hospital service
corporation
incorporated under Act No. 109 of the Public Acts of
1939,
being sections 550.501 to 550.517 of the Michigan Compiled
Laws.
(h) (g)
"Insurer" means an
insurer that term as defined in
section
106 of the insurance code of 1956, Act No. 218 of the
Public
Acts of 1956, being section 1956
PA 218, MCL 500.106. of
the
Michigan
Compiled Laws.
(h)
"Medical care corporation" means a medical care
corporation
incorporated under Act No. 108 of the Public Acts of
1939,
being sections 550.301 to 550.316 of the Michigan Compiled
Laws.
(i)
"Policy" means a group disability insurance policy issued
by
an insurer in connection with a group disability benefit plan
which
provides for hospital, medical, surgical, dental, or sick
care
benefits.
(i) Subject to subsections (2) and (3), "plan" means a form of
health care coverage with which coordination is allowed. Separate
parts of a plan for members of a group that are provided through
alternative contracts and that are intended to be part of a
coordinated package of benefits are considered 1 plan and there is
not COB among the separate parts of the plan. If benefits are
coordinated under a plan, the contract must state the types of
coverage that will be considered in applying the COB provision of
the contract. Whether the contract uses the term "plan" or some
other term such as "program", the contractual definition must not
be broader than the definition of "plan" in this subdivision. Plan
includes any of the following:
(i) Group and nongroup insurance contracts and subscriber
contracts.
(ii) Uninsured arrangements of group or group-type coverage.
(iii) Group and nongroup coverage through closed panel plans.
(iv) Group-type contracts.
(v) The medical care components of long-term care contracts,
including skilled nursing care.
(vi) The medical benefits coverage in automobile no-fault and
traditional automobile fault-type contracts.
(vii) Medicare or other governmental benefits, as permitted by
law, except as provided in subsection (2)(g). Plan under this
subdivision may be limited to the hospital, medical, and surgical
benefits of the governmental program.
(viii) Group and nongroup insurance contracts and subscriber
contracts that pay or reimburse for the cost of dental care.
(j) "Primary plan" means a plan under which benefits for an
individual's health care coverage are determined without taking
into consideration the existence of any other plan. A plan is a
primary plan under either of the following circumstances:
(i) The plan either has no order of benefit determination
rules or its rules differ from those authorized under this act.
(ii) All plans that cover the individual use the order of
benefit determination rules required under this act and, under
those rules, the benefits payable under the plan are determined to
be payable first.
(k) "Secondary plan" means a plan that is not a primary plan.
(2) For purposes of this act, plan does not include any of the
following:
(a) Hospital indemnity coverage benefits or other fixed
indemnity coverage.
(b) Accident-only coverage or disability income insurance.
(c) Specified disease or specified accident coverage.
(d) School-accident-type coverages that cover students for
accidents only, including athletic injuries, either on a 24-hour
basis or on a to-and-from-school basis.
(e) Benefits provided in long-term care insurance policies for
nonmedical services, including personal care, adult day care,
homemaker services, assistance with activities of daily living,
respite care, and custodial care, or for contracts that pay a fixed
daily benefit without regard to expenses incurred or the receipt of
services.
(f) Medicare supplement plans.
(g) A state plan under Medicaid.
(h) A governmental plan that, by law, provides benefits that
are in excess of those of any private insurance plan or other
nongovernmental plan.
(3) For purposes of this act, plans are issued by any of the
following:
(a) A health maintenance organization under which health
services are provided, either directly or through contracts with
affiliated providers, to individual or group enrollees.
(b) A dental care corporation under which dental care benefits
are provided to a group of subscribers.
(c) An insurer that provides for hospital, medical, surgical,
dental, or sick care benefits.
Sec.
3. (1) Any policy or certificate delivered or issued for
delivery
in this state in connection with a group disability
benefit
plan may contain provisions coordinating the benefits or
services
that would otherwise be provided to a covered person. Any
such
policy or certificate that contains a coordination of benefits
provision
shall provide that benefits will be payable as follows
when
coordinating with another policy or certificate that also has
a
coordination of benefits provision:
(a)
The benefits of a policy or certificate If an individual
is covered by 2 or more plans, the rules for determining the order
of benefit payments are as follows:
(a) The insurer that issues the primary plan shall pay or
provide benefits as if a secondary plan does not exist.
(b) If the individual is covered by more than 1 secondary
plan, the order of benefit determination rules under this act
determine the order under which secondary plan benefits are
determined in relation to each other. An insurer that issues a
secondary plan shall take into consideration the benefits of the
primary plan and the benefits of any other plan that are, under
this act, determined to be payable before those of the secondary
plan.
(c) A plan that does not contain order of benefit
determination provisions that are consistent with this act is
always the primary plan unless the provisions of both plans,
regardless of this subdivision, state that the complying plan is
primary.
(d) If the primary plan is a closed panel plan and the
secondary plan is not a closed panel plan, the insurer that issues
the secondary plan shall pay or provide benefits as if it were the
primary plan if a covered person uses a nonpanel provider, except
for emergency services or authorized referrals that are paid or
provided by the insurer that issued the primary plan.
(2) The order in which benefits are payable by insurers that
issue plans are determined by using the first of the following
rules that applies:
(a) The nondependent/dependent rule. If the individual is not
a dependent but is an employee, member, subscriber, policyholder,
or retiree under 1 plan and is a dependent under another plan, the
order of payment of benefits under the plans is determined as
follows:
(i) Except as otherwise provided in subparagraph (ii), the
plan
that covers the person on whose
expenses the claim is based
individual
other than as a dependent shall be
determined before the
benefits
of a policy or certificate is
the primary plan and the
plan
that covers the person individual as a dependent is the
secondary plan.
(ii) However, if If the
person individual is a medicare
Medicare beneficiary and, as a result of the provisions of title
XVIII
of the social security act, chapter 531, 49 Stat. 620, 42
U.S.C.
1395 to 1395b, 1395b-2, 1395c to 1395i, 1395i-2 to 1395i-4,
1395j
to 1395t, 1395u to 1395w-2, 1395w-4 to 1395yy, and 1395bbb to
1395ccc,
medicare 42 USC 1395 to 1395lll, Medicare is secondary to
the
policy or certificate plan
covering the person individual as a
dependent
and primary to the policy or certificate plan covering
the
person individual as other than a dependent, then the order of
benefits
is reversed and the policy or certificate plan covering
the
person individual as other than a dependent is the secondary
plan
and the policy or certificate plan covering
the person
individual as a dependent is the primary plan.
(b)
Except as otherwise provided in subdivision (c), if 2
policies
or certificates cover a person on whose expenses the claim
is
based as a dependent, the benefits of the policy or certificate
of
the person whose birthday anniversary occurs earlier in the
calendar
year shall be determined before the benefits of the policy
or
certificate of the person whose birthday anniversary occurs
later
in the calendar year. If the birthday anniversaries are
identical,
the benefits of a policy or certificate that has covered
the
person on whose expenses the claim is based for the longer
period
of time shall be determined before the benefits of a policy
or
certificate that has covered the person for the shorter period
of
time. However, if either policy or certificate is lawfully
issued
in another state and does not have the coordination of
benefits
procedure regarding dependents based on birthday
anniversaries
as provided in this subdivision, and as a result each
policy
or certificate determines its benefits after the other, the
coordination
of benefits procedure set forth in the policy or
certificate
that does not have the coordination of benefits
procedure
based on birthday anniversaries shall determine the order
of
benefits.
(c)
For a person for whom claim is made as a dependent minor
child,
benefits shall be determined according to the following:
(i) Except as provided in subparagraph (iii), if the parents
of
the minor child are legally separated or divorced, and the
parent
with custody of the minor child has not remarried, the
benefits
of a policy or certificate that covers the minor child as
a
dependent of the custodial parent shall be determined before the
benefits
of a policy or certificate that covers the minor child as
a
dependent of the noncustodial parent.
(ii) Except as provided in subparagraph (iii), if the parents
of
the minor child are divorced, and the parent with custody of the
child
has remarried, the benefits of a policy or certificate that
covers
the minor child as a dependent of the custodial parent shall
be
determined before the benefits of a policy or certificate that
covers
the minor child as a dependent of the spouse of the
custodial
parent, and the benefits of a policy or certificate that
covers
the minor child as a dependent of the spouse of the
custodial
parent shall be determined before the benefits of a
policy
or certificate that covers the minor child as a dependent of
the
noncustodial parent.
(iii) If the parents of the minor child are divorced,
and the
decree
of divorce places financial responsibility for the medical,
dental,
or other health care expenses of the minor child upon
either
the custodial or the noncustodial parent, the benefits of a
policy
or certificate that covers the minor child as a dependent of
the
parent with such financial responsibility shall be determined
before
the benefits of any other policy or certificate that covers
the
minor child as a dependent.
(d)
If subdivisions (a), (b), and (c) do not establish an
order
of benefit determination, the benefits of a policy or
certificate
in connection with a group disability benefit plan that
has
covered the person on whose expenses the claim is based for the
longer
period of time shall be determined before the benefits of a
policy
or certificate that has covered the person for the shorter
period
of time, subject to the following:
(b) The dependent covered under more than 1 plan rule. If the
individual is a dependent child, unless there is a court order or
judgment stating otherwise, the order of payment of benefits under
the plans covering the dependent child is determined as follows:
(i) If the child's parents are married or are living together,
whether or not they have ever been married, as follows:
(A) The plan of the parent whose birthday falls earlier in the
calendar year is the primary plan.
(B) If both parents have the same birthday, the plan that has
covered the parent longest is the primary plan.
(ii) If the child's parents are divorced, separated, or not
living together, whether or not they have ever been married, as
follows:
(A) If a court order or judgment states that 1 of the parents
is responsible for the dependent child's health care expenses or
health care coverage and the insurer that issued the plan of the
parent with responsibility has actual knowledge of the terms of the
order or judgment, that plan is the primary plan. If the parent
with responsibility has no health care coverage for the dependent
child's health care expenses, but that parent's spouse does, that
parent's spouse's plan is the primary plan. This sub-subparagraph
does not apply with respect to a plan year during which benefits
are paid or provided before the insurer has actual knowledge of the
terms of the court order or judgment.
(B) If a court order or judgment states that both parents are
responsible for the dependent child's health care expenses or
health care coverage, the order of benefits is determined in the
manner prescribed in subparagraph (i).
(C) If a court order or judgment states that the parents have
joint custody without specifying that one parent has responsibility
for the health care expenses or health care coverage of the
dependent child, the order of benefits is determined in the manner
prescribed in subparagraph (i).
(D) If there is no court order or judgment allocating
responsibility for the child's health care expenses or health care
coverage, the order of benefits for the child are as follows, in
the following order of priority:
(I) The plan covering the custodial parent.
(II) The plan covering the custodial parent's spouse.
(III) The plan covering the noncustodial parent.
(IV) The plan covering the noncustodial parent's spouse.
(iii) If the child is covered under more than 1 plan of
individuals who are not the parents of the child, the order of
benefits is determined in the manner prescribed in subparagraph (i)
or (ii), as applicable, as if those individuals were parents of the
child.
(iv) If the child is covered under either or both parents'
plans and is also covered as a dependent under his or her spouse's
plan, the order of benefits is determined in the manner prescribed
in subdivision (e). If the dependent child's coverage under his or
her spouse's plan began on the same date as his or her coverage
under either or both parents' plans, the order of benefits is
determined by applying the birthday rule prescribed in subparagraph
(i) to the dependent child's parents, as applicable, and his or her
spouse.
(c) The active, retired, or laid-off employee rule. If the
individual is an active employee, laid-off employee, or retired
employee, or is a dependent of an active employee, laid-off
employee, or retired employee, the order of payment of benefits
under the plans covering the individual is determined as follows:
(i) The benefits of a policy or certificate
covering plan that
covers
the person on whose expenses the
claim is based as a laid-
off
or retired employee individual
as an active employee or as a
dependent
of a laid-off or retired an
active employee shall be
determined
after the benefits of any other policy or certificate
covering
the person other than is the
primary plan. The plan that
covers the individual as a laid-off employee or retired employee or
as a dependent of a laid-off employee or retired employee is the
secondary plan.
(ii) Subparagraph (i) does not apply if either policy or
certificate
is lawfully issued in another state and the other plan
that
covers the individual does not have a
provision regarding
laid-off
or retired employees the rule
described in subparagraph
(i) and, as a result, each
policy or certificate determines its
benefits
after the other.the plans do
not agree on the order of
benefits.
(d) The continuation coverage rule. If the individual has
coverage under a right of continuation pursuant to federal or state
law, the order of payment of benefits under the plans covering the
individual is determined as follows:
(i) (e) If a person whose
coverage is provided under a right
of
continuation pursuant to federal or state law is also covered
under
another policy or certificate, the policy or certificate
covering
The plan that covers the person individual as a dependent
of
an employee, member, subscriber,
enrollee, or retiree , or as
that
person's dependent, is the primary
and plan. The plan that
covers the individual under the continuation coverage is the
secondary plan.
(ii) Subparagraph (i) does not apply if the other plan that
covers the individual does not have the rule described in
subparagraph (i) and, as a result, the plans do not agree on the
order of benefits.
(e) The longer or shorter length of coverage rule. If the
rules in subdivisions (a) to (d) do not determine the order of
benefits, the plan that has covered the individual for the longer
period of time is the primary plan and the plan that has covered
the individual for the shorter period of time is the secondary
plan. To determine the length of time an individual has been
covered under a plan, 2 successive plans are treated as 1 if the
covered individual was eligible under the second plan within 24
hours after coverage under the first plan ended. Any of the
following changes do not constitute the start of a new plan:
(i) A change in the amount or scope of a plan's benefits.
(ii) A change in the entity that pays, provides, or
administers the plan's benefits.
(iii) A change from 1 type of plan to another, such as from a
single-employer plan to a multiple-employer plan.
(2)
A policy or certificate that contains a coordination of
benefits
provision shall provide that benefits under the policy or
certificate
shall not be reduced or otherwise limited because of
the
existence of another nongroup contract that is issued as a
hospital
indemnity, surgical indemnity, specified disease, or other
policy
of disability insurance as defined in section 3400 of the
insurance
code of 1956, Act No. 218 of the Public Acts of 1956,
being
section 500.3400 of the Michigan Compiled Laws.
(3) If the insurers that issued plans cannot agree on the
order of benefits within 30 calendar days after the insurers have
received all of the information needed to pay the claim, the
insurers shall immediately pay the claim in equal shares and
determine their relative liabilities following payment. An insurer
is not required to pay more than it would have paid had the plan it
issued been the primary plan.
(4) In determining the amount to be paid on a claim by the
insurer that issued a secondary plan, if the insurer wishes to
coordinate benefits, the insurer shall calculate the benefits it
would have paid on the claim in the absence of other health care
coverage and apply the calculated amount to any allowable expense
under its plan that is unpaid under the primary plan. The insurer
that issued a secondary plan may reduce its payment by the
calculated amount so that, when combined with the amount paid under
the primary plan, the total benefits paid or provided under all
plans for the claim do not exceed 100% of the total allowable
expense for the claim. In addition, the insurer that issued a
secondary plan shall credit to a plan deductible any amounts it
would have credited to the deductible in the absence of other
health care coverage.
(5) (3)
A health maintenance organization
is not required to
pay claims or coordinate benefits for services that are not
provided or authorized by the health maintenance organization and
that are not benefits under the health maintenance contract.
Sec.
4. The commissioner director
of the department of
insurance
may and financial services
shall promulgate rules to
implement and supervise this act pursuant to the administrative
procedures
act of 1969, Act No. 306 of the Public Acts of 1969,
being
sections 1969 PA 306, MCL 24.201 to 24.315 of the Michigan
Compiled
Laws.24.328.
Enacting section 1. Section 5 of the coordination of benefits
act, 1984 PA 64, MCL 550.255, is repealed.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No.____ or House Bill No. 4935 (request no.
00198'15 **) of the 98th Legislature is enacted into law.